The Gold price has lost more than 8% since the start of the month. Furthermore, tomorrow’s employment data could spell even more touble for XAUUSD.
Gold is last trading at $1,776, up $6.12 (+0.35%).
Jerome Powell’s hawkish tone following this months FOMC meeting proved the catalyst for Gold’s recent plunge. Ahead of the Fed, XAUUSD was breaking ground above $1,900 per ounce. However, the threat of monetary tightening pushed the yellow metal to a two month low of $1,750 at the start of this week.
With the price already on the retreat, traders will now be keenly anticipating tomorrow’s non-farm payrolls data release.
The gauge is expected to improve on last month’s 559k and is projected to show the labour force has increased by a further 700,000. As a result, the unemployment rate is predicted to decline to 5.7%, compared to last month’s 5.8% release.
The daily chart shows the Gold price is attempting to recover from the support at $1,750. This should be viewed as significant because the next support is around 4.25% lower at $1,675.
A previous visit to the $1,675 area triggered a 14% rally, which took the Gold price above $1,900. The result was the formation of a bullish double-bottom pattern on the daily chart. However, should the numbers exceed expectations, this will likely result in downward pressure and target this important support. Therefore, I would consider $1,675 to be a make or break area for XAUUSD. A resulting loss of this support could prove very painful for the bulls.
Ultimately, below $1,675, the next important support is not seen for another $225.
However, the jobs numbers could fall short of expectations. In that event, the psychological $1,800 barrier is the first area of resistance. If XAUUSD clears the big figure, it has room to run to $1,870.
The world will be hoping to see signs that the US economy is continuing to improve. But, for the Gold bugs, this may prove to be the final nail in the coffin.
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